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The consortium is composed of the company’s founding members and the Kazakh government, with the new offer equivalent to 234.4p and 0.23 shares in Kazakhmys for every Eurasian Natural Resources (ENRC) share held. Kazakhmys, which owns just over a quarter of ENRC, confirmed it will back the takeover bid.
Ordinarily a takeover bid sends the share price of the target company rising, but dealers are not impressed with this deal as it is amounts to a reduction from the previous offer. ENRC is trading at 215p, down 0.7% on the day, and its share price has fallen over 70% in the past 18 months. The company’s reputation has taken a hit following allegations of corruption in Kazakhstan and Africa.
The takeover consortium wants to take the company private, so if the bid is successful the stock will be delisted from the London Stock Exchange.
The decline in the company’s value is also due to the slowdown in China; the second biggest economy in the world isn’t growing at the same rate it once was and this has weighed on investor sentiment.